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Inheritance Tax Planning in Milton Keynes

Inheritance Tax (IHT) has become a real concern for many families in Milton Keynes and across Buckinghamshire, not just the very wealthy. Rising property values, frozen tax allowances and upcoming changes to how pensions are treated mean more estates are likely to be caught in the IHT net over the coming years.

This guide explains how Inheritance Tax works in plain English, what is included in your estate and some of the key strategies to reduce the potential tax bill for your beneficiaries.

Key numbers at a glance

£ k

Nil Rate Band

£ k

Residence Nil Rate Band

%

Standard IHT rate

 years

Gift survival window

£ m

RNRB taper threshold

Apr 

Pensions enter IHT

On this page

How IHT Works
Your estate
Spouses & Family
IHT Calculator
Key ways to reduce IHT
Is it for you?
FAQs
Get in touch

How Inheritance Tax works

Inheritance Tax is charged on the value of your estate when you die. Your estate is essentially everything you own, minus any debts, at the date of death. It can also include certain gifts you have made in the seven years before you die.

There are allowances that each person benefits from:

  • A Nil Rate Band (NRB) of £325,000
  • A potential Residence Nil Rate Band (RNRB) of up to £175,000 when a qualifying home is left to direct descendants

This means an individual can usually leave up to £500,000 before Inheritance Tax becomes payable, and a married couple or civil partners can potentially have up to £1,000,000 of combined allowances, assuming both allowances are fully available and the estate qualifies for the residence allowance.

If your estate is worth more than £2,000,000, the Residence Nil Rate Band starts to taper away at a rate of £1 for every £2 over this threshold. Anything left above the available allowances is normally taxed at 40%.

What is included in my estate?

People are often surprised by how quickly an estate can add up, especially after years of paying off a mortgage and saving into investments. Your estate will typically include:

  • Your main residence
  • Any buy-to-let or holiday properties
  • Cash savings and current accounts
  • Investment portfolios, ISAs and other holdings
  • Personal belongings and valuables (for example jewellery, art, collections)
  • Cars and other vehicles
  • Certain life insurance policies if not written in trust
  • Some gifts made in the seven years before death
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At the moment, many pensions can be passed on without forming part of your estate for IHT purposes. However, from April 2027 the rules are expected to change, and defined contribution pension values are due to be brought into the IHT calculation. This is likely to bring a larger proportion of the population into scope for Inheritance Tax over time. For more on pension planning, see the Pensions page.

Spouses, partners and family position

Married / civil partners

Assets left to your spouse or civil partner are usually exempt from Inheritance Tax. On the first death, there is often no tax to pay and any unused allowances can be transferred to the survivor.

On second death

The combined allowances are tested against the total estate. This is where families can face a significant tax bill if the overall estate has grown in value over time.

Unmarried couples

Treated as single people for IHT. No automatic spousal exemption, and allowances cannot be transferred between partners, so planning can be especially important here.

Inheritance Tax Calculator

Your estate

Home, savings, investments, ISAs, valuables, etc.
Total estate
Nil Rate Band
Residence Nil Rate Band
Total allowances
Taxable estate
Rate applied
Estimated IHT bill

Every IHT position is personal. The right approach depends on family circumstances, longer-term goals and how your wealth is structured.

Indicative estimate only, not personal advice. Based on 2026/27 allowances and our current understanding of the rules. Excludes gifts in the last 7 years, business relief, agricultural relief, gifts with reservation and trust planning. For a personalised review of your IHT position, please get in touch.

Book a free initial conversation

Even if you are not sure whether your estate will face a tax charge, it can be sensible to understand your position early and consider simple steps that keep your options open.

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Key ways to reduce Inheritance Tax

Every family's situation is different, but there are a number of common strategies that can help reduce or limit Inheritance Tax.

Gifting during your lifetime

Making gifts can be an effective way to reduce the value of your estate, provided you are comfortable that you will not need those funds later on.

  • You can give away up to £3,000 each tax year using your annual exemption.
  • Small gifts of up to £250 to different individuals each year are usually exempt.
  • Regular gifts from surplus income (for example, helping grandchildren with school fees) can fall outside your estate if structured correctly.
  • Larger gifts may count as a Potentially Exempt Transfer (PET) and drop out of your estate once you survive seven years from the date of the gift.

Gifting needs to be balanced against your own long-term needs, so it is important not to give away more than you can realistically afford.

Using Trusts

Trusts can be a powerful tool to manage how and when your wealth is passed on, while potentially reducing IHT exposure.

  • Discretionary trusts allow you to ring-fence assets for a range of beneficiaries, offering flexibility and control.
  • Loan trusts can enable you to keep access to the original capital you have lent to the trust, while moving future growth outside your estate.
  • Discounted gift trusts may provide an immediate reduction in the value of your estate for IHT purposes, while still allowing you to draw a regular income.

Trust planning is a specialist area and needs careful advice, but it can be very effective for families with larger estates or more complex situations.

Business Relief Investments

Some types of investment, such as qualifying shares in certain trading companies, can benefit from Business Relief. Provided they are held for at least two years and still held on death, they may attract up to 100% relief from Inheritance Tax.

These investments carry higher levels of risk and are not suitable for everyone, but they can play a role for clients who are comfortable with volatility and want to retain control of their capital during their lifetime.

Life Assurance written in trust

In some cases, rather than trying to remove the liability, families choose to plan for it. A whole of life assurance policy, written in trust, can provide a lump sum on second death that is outside your estate for IHT purposes.

The proceeds can then be used by your beneficiaries to pay some or all of the Inheritance Tax bill, helping them preserve more of the underlying assets. The affordability and suitability of the premiums need to be considered carefully. See the Protection page for more on life assurance options.

Equity Release and Mortgage Planning

Later-life mortgages and equity release products can sometimes be used as part of an IHT strategy. By borrowing against your property, you reduce the value of your estate and may choose to gift or spend the funds.

However, these arrangements can be complex and will affect the value of your remaining estate, so they should be considered alongside wider retirement and care-planning needs.

Please note

Lewis Christopher does not provide equity release advice in-house. However, we can refer you to a trusted broker who can assist if this is something you wish to explore.

Charitable and Legacy Planning

If at least 10% of your net estate is left to charity, the rate of Inheritance Tax on the remaining taxable estate can fall from 40% to 36%. For some families, this can be an attractive way to support causes they care about while also improving the overall tax position for their beneficiaries.

Is Inheritance Tax planning right for you?

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With frozen allowances, rising house prices and the expected inclusion of pensions from 2027, more families are falling into the IHT conversation than ever before. Even if you are not sure whether your estate will ultimately face a tax charge, it can be sensible to understand your position early and consider simple steps that keep your options open.

At Lewis Christopher, we work with clients across Milton Keynes, Buckinghamshire and the surrounding areas to look at IHT in the round, alongside wider wealth management and retirement planning, so the right pieces are in the right place.

Frequently asked questions

Is Inheritance Tax only for the very wealthy?

Can I just give my house to my children?

When should I start IHT planning?

Do ISAs help with Inheritance Tax?

Will my pension be hit by IHT?

Get in touch

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Inheritance Tax planning is highly personal and depends on your family, your assets and what you want your wealth to achieve. If you would like a clear view of your likely IHT position and the options available to you, please get in touch with the Lewis Christopher team in Milton Keynes to arrange an initial conversation.

Call: 01908 230111   Email: info@lewischristopher.co.uk

The content of this page is intended as general information only and does not constitute personalised advice. Please get in touch for advice tailored to your individual circumstances.

The Financial Conduct Authority does not regulate tax planning, trust planning or estate planning.

The value of investments can fall as well as rise and you may get back less than you originally invested.

The information contained within this article is based on our understanding of legislation, whether proposed or in force, and market practice at the time of writing. Levels, bases and reliefs from taxation may be subject to change.